The average car insurance premium rose by 8% to £462 during the first quarter of 2017, according to figures released by the Association of British Insurers (ABI).
In its latest motor premium tracker report, the ABI says motor insurance premiums are rising for all age groups, except 21-25 year olds, whose insurance costs are being kept under control with telematics systems.
More increases are coming
The bad news is that these increases may prove to be the tip of the iceberg. That’s because the government made a surprise decision to cut the so-called Discount Rate from 2.5% to -0.75% in February. This is the interest rate that’s used by insurance companies when calculating compensation payouts for serious injuries.
Without getting too technical, the discount rate is the interest rate the recipient of the compensation claim is expected to get if they put the compensation cash in the bank. A lower discount rate means more cash must be paid up front.
According to the ABI, “a number of insurers” have already confirmed that price hikes following February’s decision. This suggests that the increase in motor insurance premiums seen during the first quarter of this year is likely to accelerate as the year progresses.
Our top tip
My insurance is due for renewal next month. I haven’t received the quote yet, so I don’t know if it’s gone up. But if it has, I’ll do what I usually do:
- Get at least one competing quote
- Ring up my insurance company and ask them to match it or I’ll cancel
- They usually make a better offer, even if it’s not an exact match
- I accept. And that’s it for another year.
You need to make sure that competing quotes are really comparable. Are the same things included (e.g. legal cover, courtesy car). Is the excess payment the same?
If your renewal quote really is a rip off, you also need to be prepared to cancel and go elsewhere if you’re not prepared to pay more.
As always, do your research before phoning — and stay polite and calm at all times…
It’s worth noting that this approach also works with most breakdown providers. I phone the AA every year to get my discount. Seriously.